Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 81477 April 19, 1989
DENTECH MANUFACTURING CORPORATION an !ACINTO "EDESMA in #i$
%apa%i&' a$ G(n(ral Mana)(r, petitioners,
vs.
NATIONA" "A*OR RE"ATIONS COMMISSION, CC"U, *EN!AMIN MAR*E""A,
ARMANDO TORNO, !UANITO TA!AN, !R. an !OE" TORNO, respondents.

GANCA+CO, J.:
The principal issue in this Petition is hether or not the private respondents are entitled
as a !atter of ri"ht to a #$th !onth pa%.
The herein petitioner Dentech Manufacturin" &orporation is a do!estic corporation
or"ani'ed under Philippine las. (efore the fir! beca!e a corporate entit%, it as
)non as the *.+. +edes!a ,nterprises, a sole proprietorship oned b% the herein
petitioner *acinto +edes!a. -t present, he is the president and "eneral !ana"er of the
corporation as ell as the oner of the controllin" interest thereof. The fir! is en"a"ed
in the !anufacture and sale of dental e.uip!ent and supplies.
The herein private respondents (en/a!in Marbella, -r!ando Torno, *uanito Ta/an, *r.
and *oel Torno are !e!bers of the &onfederation of &iti'ens +abor 0nion, a labor
or"ani'ation re"istered ith the Depart!ent of +abor and ,!plo%!ent. The% used to be
the e!plo%ees of the petitioner fir!, or)in" therein as elders, upholsterers and
painters. The% ere alread% e!plo%ed ith the co!pan% hen it as still a sole
proprietorship. The% ere dis!issed fro! the fir! be"innin" Februar% #1, #234.
On *une 56, #234, the private respondents filed a &o!plaint ith the arbitration branch
of the respondent National +abor Relations &o!!ission 7N+R&8 a"ainst the petitioners
for, a!on" others, ille"al dis!issal and violation of Presidential Decree No. 34#.
1
The%
ere ori"inall% /oined b% another e!plo%ee, one Ra%!undo +abarda, ho later
ithdre his &o!plaint.
-t first, the% onl% sou"ht the pa%!ent of their #$th !onth pa% under Presidential Decree
No. 34# as ell as their separation pa%, and the refund of the cash bond the% filed ith
the co!pan% at the start of their e!plo%!ent. +ater on, the% sou"ht their reinstate!ent
as ell as the pa%!ent of their #$th !onth pa% and service incentive leave pa%, and
separation pa% in the event that the% are not reinstated. It is alle"ed in the &o!plaint
and Position Paper acco!pan%in" the sa!e that the% ere dis!issed fro! the fir! for
pursuin" union activities.
,

On the other hand, the petitioners alle"ed in their Position Paper that the private
respondents ere not dis!issed fro! the fir! on account of their union activities. The%
!aintained that the private respondents abandoned their or) ithout infor!in" the
co!pan% about their reasons for doin" so and that, accordin"l%, the private respondents
are not entitled to service incentive leave pa% and separation pa%.
The petitioners also ar"ued that the private respondents are not entitled to a #$th !onth
pa%. The% !aintained that each of the private respondents receive a total !onthl%
co!pensation of !ore that Pl,999.99 and that under Section # of Presidential Decree
No. 34#, such e!plo%ees are not entitled to receive a #$th !onth pa%. The petitioners
li)eise alle"ed that the co!pan% is in bad financial shape and that pursuant to Section
$ of the Decree, the fir! is e:e!pted fro! co!pl%in" ith the provisions of the Decree.

-

- hearin" as conducted to allo the parties to further ventilate their vies. Thereafter,
the labor arbiter assi"ned to the case rendered a Decision dated *anuar% 53, #23;, the
pertinent portions of hich are as follos<
Noticeable in this case is that co!plainants initiall% !ade !anifest their lac) of
intent to see) reinstate!ent and their preference to collect their separation
pa%. Toards the end of 7the8 proceedin"s this as chan"ed to preference for
reinstate!ent ... . On the other hand, respondent has indicated ith sufficient
clarit% even at the inception of the case that it is char"in" co!plainant ith
abandon!ent and is illin" to accept the! bac) to or). In short, hile
co!plainants supposedl% anted to report for or) and respondents,
supposedl% ... illin" to accept the! bac) to or), e cannot i!a"ine h% the
parties never achieved 7an8 understandin" on this aspect.
In line ith the above !anifestation of the parties, e hereb% order the reinstate!ent
of co!plainants. =e also find respondent>s contention for e:e!ption in the pa%!ent of
7the8 #$th !onth pa% as ithout validit% 7sic8. The ceilin" of P#,999.99 a !onth in the
!atter of #$th !onth pa% has been re!oved and co!plainants are entitled to receive
fro! respondents at least the unprescribed #$th !onth pa% for the last three %ears
based on their uncontroverted pleadin"s. This order includes the !one% value of the
service incentive leave pa% of co!plainants and the cash bond ... .
1
::: ::: :::
Pre!ises considered, /ud"!ent is hereb% rendered orderin" respondents to
reinstate co!plainants to their for!er positions, ithout bac)a"es and to pa%
the! the folloin" a!ounts
#. (en/a!in Marbella < P$,25#.99
5. -r!ando Torno < $,353.99
$. *uanito Ta/an *r. < $,5;9.99
1. *oel Torno < 3;3.99
P# #,32;.99
::: ::: :::
-ll other clai!s are hereb% dis!issed.
4
(oth parties filed their respective appeals ith the N+R&. The petitioners !aintained
that no provision of la as cited in the Decision of the labor arbiter to support the vie
therein that the #$th !onth pa% ceilin" of P#,999.99 had been dul% eli!inated. The
petitioners ent on to reiterate that the fir! is in bad financial shape and is, therefore,
e:e!pted fro! co!pl%in" ith the provisions of Presidential Decree No. 34#. The
petitioners added that the refund of the cash bond filed b% the private respondents
should not have been ordered b% the labor arbiter inas!uch as the proceeds of the
sa!e had alread% been "iven b% the co!pan% to a certain carinderia
.
to pa% for the
outstandin" accounts of the private respondents therein.
/

In a Resolution dated Nove!ber 1,#23;, the Third Division of the N+R& affir!ed the
Decision of the labor arbiter. The pertinent portions thereof are as follos<
The aard of #$th !onth pa% to the co!plainants is assailed b% the
respondents for the reason that no provision of la as cited in the
decision supportin" the state!ent that the ceilin" of #$th !onth pa%
7sic8 has been re!oved.
For the record, Me!orandu! Order No. 53 issued b% President &ora'on &.
-.uino !odified Presidential Decree No. 34# to the e:tent that all e!plo%ers
are ... 7no8 re.uired to pa% all their ran)<and<file e!plo%ees #$th !onth pa%,
thus in effect re!ovin" fro! e:clusion fro! entitle!ent to the 7sic8 #$th !onth
pa% those e!plo%ees ho ere receivin" a basic salar% of !ore than
P#,999.99 a !onth.
-t an% rate the si!ple assertion of the respondent that it is in financial distress
and thus e:e!pt 7sic8 fro! pa%!ent of #$th !onth pa% 7sic8 to the
co!plainants is not in itself sufficient to evade pa%!ent of the #$th !onth pa%
to hich co!plainants ere entitled prior to the co!!ence!ent of the
respondent>s financial proble!s.
The cash bond re.uired of co!plainants is li)eise in direct contravention to
7sic8 the provisions of -rticle ##1 of the +abor &ode, as a!ended. Thus, the
refund of the cash bond appears to be in order.
7
On *anuar% 52, #233, the petitioners elevated the case to this &ourt b% a% of the
instant Petition. The private respondents, hoever, decided not to challen"e the
Resolution of the N+R&.
The !ain pleadin" is erroneousl% captioned ?Petition For Revie On &ertiorari.? This
error notithstandin", and in the interest of /ustice, this &ourt resolved to treat the
instant Petition as a special civil action for certiorari under Rule 64 of the Rules of &ourt
on account of a nu!ber of /urisdictional issues raised b% the petitioners.
The petitioners reiterate their contention that the private respondents abandoned their
or). In support of this clai!, the% call attention to the alle"ed testi!on% of the "eneral
!ana"er of the petitioner fir!.
8
The petitioners li)eise !aintain that the co!pan% is a
financiall% distressed fir! e:e!pted fro! co!pl%in" ith the provisions of Presidential
Decree No. 34#.
9

The petitioners also contend that Me!orandu! Order No. 53 cited b% the N+R& cannot
appl% to the case at bar. The% point out that the said Me!orandu! Order as si"ned
into la onl% in #236, lon" after the case as instituted ith the N+R& and, accordin"l%,
the sa!e cannot be "iven a retroactive effect.
10
It is li)eise the position of the
petitioners that the refund of the cash bond filed b% the private respondents is i!proper
inas!uch as the proceeds of the sa!e had alread% been "iven to a certain carinderia to
pa% for the outstandin" accounts of the private respondents therein.
11
-s instructed b% the &ourt, the respondents filed their respective co!!ents on the
Petition. In see)in" the dis!issal of the Petition, the Solicitor @eneral points out that
each of the private respondents is actuall% paid less than Pl,999.99 a !onth and that,
accordin"l%, the% are entitled to a #$th !onth pa% pursuant to Presidential Decree No.
2
34#. The Solicitor @eneral also ar"ues that under the rules and re"ulations
i!ple!entin" the said Decree, a distressed e!plo%er shall .ualif% for e:e!ption fro!
the re.uire!ents of the Decree onl% upon prior authori'ation fro! the Secretar% of
+abor and ,!plo%!ent. The Solicitor @eneral !anifests that no such prior authori'ation
had been obtained b% the petitioner fir!. The Solicitor @eneral li)eise !aintains that
the Pl,999.99 ceilin" recited in Presidential Decree No. 34# has been eli!inated b%
Presidential Decree No. #$61, pro!ul"ated on Ma% #, #2;3.
1,

-s to the refund of the cash bond filed b% the private respondents, the Solicitor @eneral
sub!its that such cash bond re.uired fro! the private respondents is disalloed under
-rticle ##1 of the +abor &ode.
1-

-fter the parties sub!itted other supple!entar% pleadin"s, the &ourt resolved to "ive
due course to the Petition, and to consider the case sub!itted for decision.
The Petition is devoid of !erit.
Presidential Decree No. 34# as si"ned into la in #2;4 b% then President Ferdinand
Marcos. 0nder the ori"inal provisions of Section # thereof, all e!plo%ers are re.uired to
pa% all their e!plo%ees receivin" a basic salary of not !ore than Pl,999.99 a !onth,
re"ardless of the nature of their e!plo%!ent, a #$th !onth pa% not later than Dece!ber
51 of ever% %ear. 0nder Section $ of the rules and re"ulations i!ple!entin" said
Presidential Decree financiall% distressed e!plo%ers, i., e., those currentl% incurrin"
substantial losses, are not covered b% the Decree. Section ; thereof re.uires, hoever,
that such distressed e!plo%ers !ust obtain the prior authori'ation of the Secretar% of
+abor and ,!plo%!ent before the% !a% .ualif% for such e:e!ption.
On Ma% #, #2;3, Presidential Decree No. #$61 as si"ned into la.
14
The Decree
en/oined the Depart!ent of +abor and ,!plo%!ent to stop acceptin" applications for
e:e!ption under, inter alia, Presidential Decree No. 34#.
On -u"ust #$, #236, President &ora'on &. -.uino issued Me!orandu! Order No. 53
hich !odified Section # of Presidential Decree No. 34#. The said issuance eli!inated
the Pl,999.99 salar% ceilin".
Fro! the fore"oin", it clearl% appears that the petitioners have no basis to clai! that the
co!pan% is e:e!pted fro! co!pl%in" ith the pertinent provisions of the la relatin" to
the pa%!ent of #$th !onth co!pensation.
The Pl,999.99 salar% ceilin" provided in Presidential Decree No. 34# pertains to basic
salary, not total !onthl% co!pensation. The petitioners ad!it that the private
respondents or) onl% five da%s a ee) and that the% each receive a basic dail% a"e
of P19.99 onl%. - si!ple co!putation of the basic dail% a"e !ultiplied b% the nu!ber
of or)in" da%s in a !onth results in an a!ount of less than Pl,999.99. Thus, there is
no basis for the contention that the co!pan% is e:e!pted fro! the provision of
Presidential Decree No. 34# hich !andated the pa%!ent of #$th !onth co!pensation
to e!plo%ees receivin" less than P#,999.99 a !onth.
,ven assu!in", arguendo, that the private respondents are each paid a !onthl% salar%
of over Pl,999.99, the co!pan% is still not in a position to clai! e:e!ption. The rules
and re"ulations i!ple!entin" Presidential Decree No. 34# provide that a distressed
e!plo%er shall .ualif% for e:e!ption fro! the re.uire!ents of the Decree onl% upon
prior authori'ation fro! the Secretar% of +abor and ,!plo%!ent. -s correctl% pointed
out b% the Solicitor @eneral, no such prior authori'ation had been obtained b% the
petitioner fir!.
The refund of the cash bond filed b% the private respondents is in order. -rticle ##1 of
the +abor &ode prohibits an e!plo%er fro! re.uitin" his e!plo%ees to file a cash bond
or to !a)e deposits, sub/ect to certain e:ceptions, to it<
-rt. ##1. Deposits for loss or damage.< No e!plo%er shall re.uire his or)er to !a)e
deposits fro! hich deductions shall be !ade for the rei!burse!ent of loss of or
da!a"e to tools, !aterials, or e.uip!ent supplied b% the e!plo%er, e:cept hen the
e!plo%er is en"a"ed in such trades, occupations or business here the practice of
!a)in" deductions or re.uirin" deposits is a reco"ni'ed one, or is necessar% or
desirable as deter!ined b% the Secretar% of +abor in appropriate rules and re"ulations.
The petitioners have not satisfactoril% disputed the applicabilit% of this provision of the
+abor &ode to the case at bar. &onsiderin" further that the petitioners failed to sho
that the co!pan% is authori'ed b% la to re.uire the private respondents to file the cash
bond in .uestion, the refund thereof is in order.
The alle"ation of the petitioners to the effect that the proceeds of the cash bond had
alread% been "iven to a certain carinderia to pa% for the accounts of the private
respondents therein does not !erit serious consideration. -s correctl% observed b% the
Solicitor @eneral, no evidence or receipt has been shon to prove such pa%!ent.
-ccordin"l%, the &ourt is not convinced that the respondent National +abor Relations
&o!!ission co!!itted a "rave abuse of discretion a!ountin" to loss of /urisdiction in
affir!in" the Decision of the labor arbiter.
=A,R,FOR,, in vie of the fore"oin", the instant Petition is hereb% DISMISS,D for
lac) of !erit. =e !a)e no pronounce!ent as to costs. SO ORD,R,D.
3